As proven by the COVID-19 pandemic, having healthy cash flow can help businesses tide over difficult periods. Here are some questions and answers to help business owners understand the ins and outs of good recordkeeping. Check with your accountant, state, insurance company, or the IRS if you have questions how long to keep company records about recordkeeping duration.

Which plan records should you keep in case of an IRS audit?

Using a digital system helps free up time and money fixed assets for your employees. As a result, you can concentrate on core business tasks that would generate a higher rate of growth in your business instead of chasing a trail of paperwork. When it comes to your financial year end, good record keeping practice can help you save time and costs.

• If you’ve paid for things such as tools, travel or specialist clothing for work, you may be able to claim for these to reduce your tax bill.
• You should keep retirement plan records until the trust or IRA has paid all benefits and enough time has passed that the plan won’t be audited.
• We can charge a penalty if the company fails to keep or retain records, see EM4650.
• Not all bank branches offer safe deposit boxes today, but it can be an option if you prefer keeping these documents offsite.
• However, as a business owner, your priority is to grow your business.
• Norton Rose Fulbright’s financial institutions team provides straightforward legal updates.

How should I store my records?

Typically, you must keep business records for three years and employment tax records for at least four years. Keeping accurate and organized business records https://www.bookstime.com/articles/bookkeeping-seattle is key to managing your finances, complying with IRS requirements, and protecting your company. You should keep retirement plan records until the trust or IRA has paid all benefits and enough time has passed that the plan won’t be audited. Retirement plans are designed to be long-term programs for participants to accumulate and receive benefits at retirement. As an employer sponsoring a retirement plan, you are required by law to keep your books and records available for review by the IRS.

Running a Business in Singapore

Businesses in some industries have additional state and federal requirements for recordkeeping. With this in mind, be sure to speak with a small business attorney to obtain a complete list. Records of your commercial auto, errors and omissions (E&O), general liability, property coverage, umbrella liability, and medical malpractice (if applicable) insurance should be kept forever. These records can help you defend against claims or suits for compensation that occur long after your business closes.

• But by now, you should be feeling more positive about the benefits of keeping accurate, up to date and comprehensive records, and not just seeing it as a compliance exercise.
• She has also been involved in numerous IT related transactions including large multi-jurisdictional outsourcing transactions and broadband network infrastructure projects.
• A VAT registered company may be allowed to keep certain records for VAT purposes for a shorter period than those described above.
• Refer to the Record Keeping Checklist (PDF, 61KB) for a summary of the different types of records required.
• If your records are kept electronically, your company should ensure that proper internal controls are put in place to ascertain the integrity, completeness and reliability of the electronic records.
• By law—or in some instances, best practice—you should continue to store your business’s documents long after winding down.

Record Retention: A Handy List of What to Save (and For How Long)

Most states (as of this writing, 46) have an applicable statute of repose, which range from four to fifteen years. For example, Massachusetts has a 6-year statute; New Jersey, Ohio and West Virginia have 10-year statutes; Pennsylvania has a 12-year statute. Recordkeeping allows you to consolidate records for better business decisions, and give reasons to substantiate every choice you make. Loopholes and oversight can cost you your business, but practising good record keeping serves as a precaution for business owners like yourself.

How long should you keep plan records?

Digital backups take up much less space than having multiple paper copies of your important documents. Use file folders to organize paperwork by subject, year or another method of your choice. Bankers boxes are another storage option, but these are more susceptible to water damage. If you have financial records or documents you aren’t sure you’ll need, err on the side of caution. Here’s a breakdown of documents to save, based on the time they should be kept.

What happens if business records aren’t retained?

Records may include deeds, titles, or documents showing an asset’s purchase date and price, use, and sales date and price. The IRS recommends you back up your paper documents electronically in case of flood, fire, or other disaster. Choose a method of electronic storage—whether on your computer, in the cloud, or on a thumb drive or external hard drive—that offers the most safety and security against identity theft. Make sure your computer is password protected, and consider using an encryption program like Microsoft BitLocker, Apple FileVault, or a third-party program. Choose a well-protected cloud storage program, and use a unique and complex password with two-factor authentication. You might also have leases for your business premises, insurance policies, and business loan records, among other documents.

Are the records connected to property?

Documents such as minutes of meetings and company resolutions must be stored for at least 10 years from their creation. If the latter is chosen, it must be possible for hard copies of the electronically stored records to be replicated. Generally speaking, records must be kept at the company’s registered office. A Certificate of Incorporation is proof that a company is registered with Companies House under the relevant law. The certificate, also known as the birth certificate of a company, will be sent to the business owners following a successful company registration. The IRS and Small Business Administration (SBA) recommend you keep key business documents on file long after your business closes.